Vietnam gov’t bonds, banks get rating downgraded
Vietnam gov’t bonds, banks get rating downgraded
Moody's (Moody's) Investors Service has downgraded the ratings of Vietnam's government bond and eight local commercial banks.
It has cut Vietnam's foreign- and local-currency government bond ratings by a notch, from B1 to B2.
The downgrade is due to stresses in the banking industry from a prolonged credit boom and a darkening economic backdrop, Reuters quoted the credit rating agency as saying.
However, Moody's said the ratings outlook is now stable, meaning that upside and downside risks are balanced.
"The ratings downgrade was driven by the intensification of banking system vulnerabilities because of the overhang from a prolonged credit boom and the subsequent tightening in policy," the agency said.
Vietnam's long-term foreign currency (FC) bond ceiling remained at B1, while its long-term FC deposit ceiling was downgraded to B3 from B2. Its local currency bond and deposit ceilings were also unchanged at Ba2.
After downgrading the credit rating for government bonds, Moody's has also downgraded the ratings for eight commercial banks in Vietnam.
They are Asia Commercial Joint Stock Bank (ACB), the Bank for Investment and Development of Vietnam (BIDV), Military Commercial Joint Stock Bank (MBB), Saigon-Hanoi Commercial Joint Stock Bank (SHB), Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank - STB), the Vietnam Technological and Commercial Joint Stock Bank (Techcombank), the Vietnam Bank for Industry and Trade (Vietinbank-CTG) and Vietnam International Commercial Joint Stock Bank (VIB).
It is a direct consequence of the national credit rating cut, it said.
At odds
With the new rating, the latest credit rating imposed on Vietnam from Moody's is the lowest among 3 reputable rating agencies in the world, including Standard & Poor's (S&P) and Fitch.
It is two notches lower than the rating of S&P and a notch lower than that of Fitch. Standard & Poor's and Fitch’s recent credit rating for Vietnam was at BB- and B-, respectively.
Both foreign credit rating agencies also maintained Vietnam's outlook at stable.
S&P last week revised the level of Banking Industry Country Risk Assessment (BICRA) of Vietnam from group ‘10’ – very high risk - to ‘9’ – high-risk groups. The adjustment of the firm took place after the Vietnam Government carried out a series of economic stabilization policies starting 2012.
In addition, Standard & Poor's also raised the credit rating class for three major banks in Vietnam, Sacombank, Techcombank and Vietcombank from the ‘BB-‘ to ‘B+’ with a stable outlook.
At the same time, S&P’s credit ratings of BIDV and VietinBank are kept unchanged at ‘B+’ with stable outlook.
The GDP growth rate of Vietnam in the first nine months of 2012 tends to improve quarter by quarter.
GDP in the first quarter and second quarter increased by 4 percent and 4.66 percent, and that in the third quarter was estimated to be at 5.35 percent. The annual GDP growth was estimated at 4.73 percent in the first 9 months.
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